UK economic GDP growth doubles in second quarter

IN: Business news

The UK economy grew by 0.6 per cent in the second quarter of 2013, doubling the growth seen in the first three months of the year, according to the latest data published by the Office for National Statistics (ONS) on July 25th.

undefinedThe improvement was powered by the dominant services sector that contributed 0.48 per cent of the 0.60 per cent increase in output.

However, there was a contribution from all of the main sectors of the economy, suggesting that the economic recovery is broad-based.

The construction sector posted a 0.9 per cent increase in output compared to the first quarter of the year and the production sector contributed 0.08 per cent to the increase in GDP as output in the manufacturing sector rose by 0.4 per cent from the previous quarter.

This is the first estimate of GDP output for the period and only includes data from the output side of the economy. A further update that includes the expenditure side of the economy, including consumer spending will be issued next month.

Howard Archer, Chief UK Economist at forecasters IHS Global Insight said: “It is worth noting that consumer spending likely saw appreciable expansion and contributed markedly to growth. This is significant as consumer spending accounts for some 63% of GDP on the expenditure side.”

The increase means that annual economic growth is up to 1.4 per cent from 0.3 per cent at the end of the first quarter.

However, overall UK economic output fell by 7.2 per cent from its peak in March 2013 and is still 3.3 per cent below that level more than five years ago.

This means the economy has only recovered just over half of the lost output since then and is still not producing as much as it was in 2007.

Economists believe if the recovery continues at its expected pace of growing by a further 0.5 per cent in each of the last two quarters of 2013 and then by a little more through 2014, the UK economy should finally clear the output deficit sometime in 2015.

Mr Archer added: “While we suspect that the economy will struggle to sustain the second quarter growth rate, it does appear that it is genuinely moving to a firmer footing and we anticipate that it should be able to achieve steady if unspectacular expansion around 0.4-0.5% quarter-on-quarter through the second half of 2013 and then gradually pick up during 2014.

“As such, we expect GDP growth to come in around 1.1% in 2013 and 1.8% in 2014.”


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